Social Security reserves forecast to run dry in 2022

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Social Security is made up of two major trust funds, the Old-Age and Survivors Insurance program and the Disability Insurance program.

In total, Social Security will spend $773 billion this year, jumping to $1.4 trillion a year by 2022. But every year those payments will outstrip payroll taxes coming in to the system, draining the trust funds and leading to the 2022 deficit.

Under current law, that means Social Security would have to cut benefits that year, said Douglas Holtz-Eakin, former director of the Congressional Budget Office and now president of the right-leaning American Action Forum.

“At that point, the Social Security Administration will not have the legal means payroll taxes coming in, or holdings in the trust fund to pay full benefits, and as a result it will have to cut benefits across the board to match payroll [taxes] coming in,” Mr. Holtz-Eakin said. “That’s a disgraceful plan.”

Social Security’s spending growth will be matched by the other two major entitlements. Medicare will go from $478 billion to $908 billion, and Medicaid will rise from $255 billion in federal spending to $578 billion, according to the budget.

All sides agree that Social Security should be the easiest of the three programs to tackle.

But recent efforts to do so have been politically disastrous. President Bush’s plan to add personal accounts to the system collapsed in 2005 under opposition from both parties on Capitol Hill and from seniors across the country who feared it would jeopardize their benefits.

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